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Cirrus Logic had a tough 2013. The stock looks cheap after losing 29% of its value in a year. Will Cirrus sink further in 2014, or is the stock primed for a big surge?

But the new year brings new beginnings. Will Cirrus continue to sink in 2014, or is the audio-chip designer's stock primed for a huge surge to the upside?

Big things often come in small packages. A Cirrus Logic audio codec, shown in scale next to a standard paper clip. Image source: Cirrus Logic.

The word on the Street Analysts see Cirrus reporting adjusted earnings of $2.65 per share for the current fiscal year, which ends in March. The following fiscal year, which reflects the bulk of calendar year 2014, has a 32% lower Street target at $1.80 per share. But sales are expected to grow 2.9% year over year.

The analyst firms worry about Cirrus Logic's lack of diversification. More than 80% of the company's sales come from one huge customer: Apple(NASDAQ:AAPL).

If Cirrus were to lose its core audio-chip contracts for any of Apple's high-volume product lines, such as iPads or iPhones, the effects on Cirrus' top and bottom lines would be drastic and unpleasant. It also doesn't help Cirrus any when Apple starts to lose its high unit growth rates -- a trend break that is already happening.

In the last four reported quarters, Apple's trailing iPhone sales growth has dwindled from 73% to 24%and iPad growth slowed down from 80% to 28% over the same period. This is not good news for Cirrus, which lives and dies by high-volume sales.

Will there be life after Apple?CEO Jason Rhode has been looking for diversification opportunities for years, but audio chips for Apple have only become more and more central to the company's financial health. Cirrus has landed a couple of small design wins for portable audio in China. As modern smartphones often feature voice controls, Cirrus is designing new audio chips that can handle the processing and interpretation of spoken words.

Cirrus also makes power controllers for LED lights, which is a very interesting market now that plain old lightbulbs are being legislated out of existence. But that market is still "an inch deep and a mile wide," in the words of Jason Rhode.

So Cirrus is absolutely working on a broader range of products and customers, just in case Apple ever stops being such a sweet sugar daddy. But it's slow going, and Cirrus investors would be smart to keep an eye on the progress in LED power circuits and non-Apple audio chips.

Will Cirrus sink or surge in 2014? In the end, Cirrus shares still act as a proxy for Apple's high-volume businesses with an extra helping of contract cancellation risk. The stock is currently beaten down and trades for less than 10 times trailing earnings, so a fairly humdrum 2014 without any lost Apple business should drive Cirrus shares much higher. Just be prepared for Apple's sword of Damocles to drop.

In short, Cirrus is not a safe place to park your life savings right now. Take the Apple risk into account before betting on Cirrus in 2014.

Fool contributor Anders Bylundhas no position in any stocks mentioned. Follow him @TMFZahrim. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Cirrus Logic. Try any of our Foolish newsletter services free for 30 days.